During development of multi-cellular organisms, each cell integrates various signals from neighboring cells in order to achieve the correct gene regulation required for its differential function as part of the whole. One of the hallmarks of cancer cells is their failure to respond to signals from neighboring cells, which tell them to cease going forth and multiplying. Ultimately, all of the signals are integrated at the level of transcription. Since most developmentally regulated transcription occurs through RNA polymerase II, we have focused our efforts towards understanding the function of RNA polymerase II and its regulation by sequence-specific transcription factors and signal transduction pathways. Our approach is to study the developmental regulation of the basal transcription machinery. We have isolated mutations in RNA polymerase II subunits and genetically interacting mutations, which identify proteins that interact directly with RNA polymerase II. We have also isolated mutations in two sequence-specific DNA-binding transcription factors, dTcf and hsf, which disrupt developmental pathways that regulate the functioning of RNA polymerase II. Our genetic, biochemical and developmental analyses of these mutations will elucidate how cell-cell signaling is integrated to affect transcription of specific target genes. Many of the mutations we induced in the two largest subunits of RNA polymerase II disrupt development in very specific ways, which was not expected for mutations in a general transcription factor. The most common developmental effect is hypertrophy of the nervous system. In addition, some RNA polymerase II mutations cause homeotic transformations whereby one structure or segment of the fly is transformed into another. To further characterize RNA polymerase II function in vivo, we have also developed and utilized a technique to isolate rare second site gene- and allele-specific suppressors and enhancers that modify RNA polymerase II mutant phenotypes. My research group has analyzed suppressor mutations of 4 different mutant alleles of RNA polymerase II. The interacting mutations identify specific domains in RNA polymerase II. For example, a mutation in the conserved F region of the largest subunit is suppressed by other mutations in F or by mutations in the second largest subunit in its conserved regions E-F. No other regions of polymerase subunits were identified. The original mutation is defective in elongation or termination and the suppressor mutations also affect this step in transcription. These results suggest that the identified domains are critical for elongation and/or termination. In addition, we have identified a new gene that interacts with these same mutations but does not map near a known subunit of RNA polymerase II. We are cloning this gene and suggest it may be an elongation or termination factor for RNA polymerase II. My research group has identified a mutation in the gene, prospero, which encodes a homeodomain transcription factor required for embryonic nervous system development. The subcellular distribution of Prospero protein is dynamically regulated during development, first appearing in neuroblasts where it is cortically localized and then entering the nucleus of daughter ganglion mother cells. The mutation we identified results in a 30 amino acid truncation of the conserved C-terminal "Prospero domain". Molecular dissection of the homeo and Prospero domains has demonstrated that they include two independently functioning nuclear export signals, one of which is sensitive to the drug leptomycin B, indicating that export is mediated through the Exportin pathway. The homeo and Prospero domains also include a nuclear export signal mask. Mutation of the mask results in constitutive cytoplasmic localization of the protein in embryos and tissue culture cells. We conclude that controlled nuclear export is a key regulatory mechanism in Prospero function in all higher eukaryotes. We have identified mutations in the Drosophila ortholog of the vertebrate transcription factors Tcf/Lef (T cell factor/lymphocte enhancer binding protein). Initially, Tcf and Lef had been identified by their differential expression and DNA binding during T cell and B cell differentiation. However, elevated levels of Tcf/b-catenin are also observed in human colon cancer and melanoma. We collaborated in the cloning of dTcf from Drosophila and demonstrated that it is the effector of wingless signaling in vivo. These results suggest that dTcf can be used to identify developmental targets and mis-expressed genes responsible for cancer. We have also identified a direct target of dTCF regulation, decapentaplegic (dpp), which is an ortholog of transforming growth factor b. We showed that two dTCF binding sites in dpp are required for repression of the gene in vivo. These results suggest that derepression by wingless/WNT signaling might be as important as activation in regulating development. A similar mechanism may also play an important role in human cancers.